Reflections From The ASPO Peak Oil Conference

I come to you today from Sacramento, California, where the fourth annual peak oil conference by the Association for the Study of Peak Oil - USA (ASPO-USA) has just concluded.

There is so much to tell you, I hardly know where to begin. In fact I have about 33 pages of typewritten notes here, which I will clean up and publish as soon as possible. For now, I’ll just share some general observations.

On the whole, the conference was typically outstanding. I have attended three of ASPO-USA’s four conferences so far, and all were packed with high quality presentations dense with information; no sleepy corporate speeches here. In fact, it’s quite mentally taxing and hard to get enough sleep! Without a doubt, they are the best conferences I have ever attended.

It’s also an incredible opportunity to talk with many of the top researchers, scientists, and businesses people in the field, on breaks or over dinner and drinks.

I was privileged to chat with many of the people from whose work I have learned much, including Matthew Simmons, Charles Hall, Robert Rapier, Kjell Aleklett, James Howard Kunstler, Jeffrey Brown, Kyle Saunders, David Hughes, Alan Drake, Tom Whipple, Jim Puplava, and Jan Lundberg (and those are just the ones I can remember in my sleep-deprived state).

As such, in some ways it is a sort of group therapy session for the “peakists.” The looming reality of going over the energy hump, combined with a deep uncertainty about the ongoing market meltdown, made all attendees grateful for a chance to talk with each other about our number-one worry, a subject that turns almost everyone off back home and creates tension in many a marriage. We had a lot to talk about.

Foremost on everyone’s mind, I think, was the market. How could it not be, with a $1.8 trillion in federal bailout money on the table, the markets in turmoil, the referees changing the rules of the game while it’s in progress (if you were short the financials last Friday, I feel your pain).

And how appropriate, that on the second day of the conference light, sweet crude shot to its biggest one-day gain ever, gaining 15% to close at $121, having risen as high as $130 intraday and triggering a temporary shutdown in Nymex trading of crude.

What we’re seeing in the markets right now is unprecedented, extremely serious, and we have only a matter of days or weeks to avoid catastrophe. It’s starting to look like a bad episode of 24. It’s no wonder we’re nervous.

The news from the peak oil world is no less nerve-wracking. Even as someone who’s well familiar with much of the subject matter, there were plenty of moments that made me say “Whoa.”

Many of those moments centered around the data on China. Several presentations emphasized that emerging markets are now the key factor in almost every resource. The price and availability of oil, coal, minerals, metals, and building materials are increasingly set by demand from the developing world. Accordingly, China is fast becoming our number-one competitor for every kind of resource, and is quickly overtaking us in everything from carbon emissions, to cars on the road, to coal consumption.

The range of estimates on when the absolute global oil peak will be (or was) seemed to have narrowed considerably from previous conferences. It looked to me like consensus range is roughly 2005 to 2012.

I noted with some interest that many projections of a whole variety of key commodities and metrics peaked somewhere in the 2012 range. Maybe those crazy Mayans were right after all.

We certainly live in interesting times. I am reminded of something Robert Hirsch said at the ASPO-USA conference last year: “Peak oil: the more you think about it, the worse it gets.”

Conversely, the more you think about renewable energy and alternate modes of transportation, the better it gets. As natural gas and coal get harder to extract and more expensive, the outlook for wind and other renewables just gets better. As moving peole and goods around by car, truck and airplane gets increasingly expensive, plug-in cars and rail look better and better.

Many of the presenters noted that the next 20 years would be the investment event of a lifetime. Those of you who have read my book know that I couldn’t agree more.

To mention just a couple of examples off the top of my head: A plausible scenario in which the US manages to produce 30% of its electricity from wind. Enormous projects under way in wind and solar. Some $10 billion in capital committed globally to development of Podcars (a JPod was on display at the conference).

There is no doubt that we have some enormous changes coming to us, whether we like it or not. The future of fossil fuels has never looked dimmer, and “business as usual” isn’t going to remain “usual” for much longer. For starters, we are very likely looking at the end of globalization.

That also means we’re looking at a new beginning for American manufacturing capacity. The Rust Belt is about to enjoy a renaissance, as skyrocketing shipping costs force the production of everything from steel to cars to cement to renewable energy machines to come back home. Consider this: If I heard it right, Colorado just landed a deal to host the world’s largest wind turbine manufacturing plant, a new plant from Denmark’s Vestas Wind Systems (VWS.CO).

There has never been more reason to fear for the future of energy, but at the same time, I have never seen such hope for it.

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